Calculation of Component Prices

Component Prices are calculated using monthly average
dairy product prices for the month in question. In the
folowing example, component prices for Nov 2014
is calculated by using the monthly (weighted) average of
different weekly NASS prices. They were then released on
Nov 28, 2014

NASS Monthly Average Prices

The component prices calculated in the section use monthly
average U.S. NASS survey prices. These monthly average prices
are calculated by a weighted average.

The monthly average prices used in this section are calculated
from NASS prices for each week.

These monthly average prices are as follows:

AA Butter 1.9891
Cheddar Cheese 2.1305
Dry Whey 0.6365
Nonfat Dry Milk 1.3902

Butterfat Price

(used for Class III and Class IV prices and in making payment to producers)

= (AA Butter Avg – 0.1202) *1.2

= 1.8689 * 1.2

= 2.2427

So, the Announced Butterfat Component Price for Nov 2014 is 2.2427